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Investing.com -- Moody’s Ratings has upgraded Diversified Healthcare Trust’s (NASDAQ:DHC) corporate family rating to Caa1 from Caa3, while maintaining a stable outlook.
The rating agency also upgraded DHC’s senior secured rating to B3 from Caa2, backed senior unsecured to Caa1 from Caa3, and senior unsecured to Caa2 from Ca. The REIT’s speculative grade liquidity rating remains at SGL-4.
The upgrade reflects reduced default risk following DHC’s refinancing of its June 2025 maturity and progress toward addressing its January 2026 maturity through asset sales and secured debt financing.
Moody’s expects DHC’s adjusted net debt to EBITDA to improve to approximately 9x by the end of 2025, down from 11.6x at the end of 2024. This improvement stems from substantial growth in the REIT’s senior housing operating portfolio, driven by increasing demand from an aging population and limited new supply.
The REIT’s senior housing segment contributes about 50% of net operating income but operates with short-term leases and high fixed costs. DHC’s medical office portfolio provides stability as these tenants typically maintain longer lease terms.
In the first half of 2025, DHC successfully refinanced its June 2025 maturity through secured debt issuance and repaid $300 million of its January 2026 zero-coupon secured notes using asset sale proceeds, leaving approximately $641 million outstanding. As of June 30, the REIT had about $280 million in additional asset dispositions under agreement or letter of intent.
Despite these improvements, Moody’s maintains the SGL-4 liquidity rating, citing weak liquidity. At the end of June, DHC had $141.8 million in cash and full availability under its new $150 million revolving credit facility, which is secured by 14 properties and expires in June 2029. The REIT faces capital expenditure needs of around $150 million in 2025.
Following the January 2026 zero-coupon bond maturity, DHC’s next debt maturity is scheduled for the first quarter of 2028.
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